Morgan v. Mobil Oil Corp.

556 F. Supp. 108, 76 Oil & Gas Rep. 206, 1983 U.S. Dist. LEXIS 19828
CourtDistrict Court, D. Kansas
DecidedJanuary 24, 1983
DocketNo. 82-1157
StatusPublished
Cited by1 cases

This text of 556 F. Supp. 108 (Morgan v. Mobil Oil Corp.) is published on Counsel Stack Legal Research, covering District Court, D. Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Morgan v. Mobil Oil Corp., 556 F. Supp. 108, 76 Oil & Gas Rep. 206, 1983 U.S. Dist. LEXIS 19828 (D. Kan. 1983).

Opinion

MEMORANDUM AND ORDER

KELLY, District Judge.

Pending before the Court are summary judgment motions filed by plaintiffs and defendant. Plaintiffs are the lessors of three quarter-sections of land in Morton County, in Southwest Kansas. Defendant Mobil Oil Corporation (Mobil) leases these three tracts and is currently producing gas from them. Plaintiffs seek a legal determination that their leases with Mobil have terminated, at least as to production from all geological formations below the Panoma-Council Grove formation. Both sides have filed extensive briefs supporting their respective positions, and the Court has had the benefit of counsels’ oral argument. Following careful consideration of the stipulated facts and the applicable case law, the Court finds defendant’s motion for summary judgment should be granted.

I. FACTS

Prior to the filing of the pending motions, the Court allowed both parties to file their separate versions of a pretrial order. The stipulated facts in both orders are essentially identical, although plaintiffs have added [109]*109additional information regarding background of the litigation. Counsel for Mobil has represented to the Court that although it does not agree that all of the facts contained in plaintiffs’ pretrial order are relevant, Mobil nevertheless does not contest their accuracy. Consequently, the Court adopts the plaintiffs’ version of the stipulated facts as set forth in their pretrial order (Dkt. 12)1. The parties have also attached identical exhibits labeled A through K to their respective proposed pretrial orders. Plaintiffs have attached an additional Exhibit L to its proposed pretrial order, which is the 1938 Kansas Corporation Commission order regarding unitization of the Hugoton Field. For the purposes of this order, the Court adopts the exhibits, including plaintiffs’ Exhibit L, as they are incorporated by reference into the stipulated facts set forth below. The following are the stipulated facts from plaintiffs’ proposed pretrial order, which Mobil agrees are uncontroverted. (The location and ownership of the various tracts and the gas wells are illustrated on a map attached at the end of this Order.)

1. On or about January 25, 1930, L.C. Morgan and W.S. Morgan, her husband (parents and predecessors in title to plaintiffs), were the owners of the SE/4 of Sec. 6, Twp. 33S, R. 39W, in Morton County, Kansas; the NE/4 of Sec. 6, Twp. 33S, R. 39W, in Morton County, Kansas; and the NW/4 of Sec. 8, Twp. 33S, R. 39W, in Morton County, Kansas. Mr. and Mrs. Morgan executed and delivered three separate oil and gas leases, one for each tract herein described, to the Argus Production Company, defendant’s predecessor in interest.
2. The lease of the SE/4 of Sec. 6, Twp. 33S, R. 39W provided for annual delay rentals, and a primary term of ten years. A commercial producing gas well was completed on this quarter on July 7, 1930.
3. The lease of the NE/4 of Sec. 6, Twp. 33S, R. 39W, provided for annual delay rentals; was for a primary term of ten years; and was released on February 27, 1938.
4. The lease of the NW/4 of Sec. 8, Twp. 33S, R. 39W, is for a primary term of ten years; and provides for annual delay rentals.
5. On or about February 15, 1937, Floyd A. Thomas, et al, executed and delivered to Missouri Valley Gas Corporation, defendant’s predecessor in interest, an oil and gas lease covering the NW/4 of Sec. 7, Twp. 33S, R. 39W, Morton County, Kansas, and other land.
6. On November 27, 1938, L.C. Morgan and W.S. Morgan, her husband (plaintiffs’ predecessors in interest), executed and delivered a second oil and gas lease covering the NE/4 of Sec. 6, Twp. 33S, R. 39W, in Morton County, Kansas, to Republic Natural Gas Company. Republic Natural Gas Company, defendant’s predecessor in interest, became the owner of each of the above leases prior to November of 1938.
7. On or about May 9, 1930, L.C. Morgan and W.S. Morgan, her husband, conveyed an undivided I/2 of the minerals in and to the SE/4 of Sec. 6, Twp. 33S, R. 39W, Morton County, Kansas, to B.A. Hardey, subject to the terms of the lease described at paragraph 1 above. These mineral interests are now owned by E.V. Baker of Houston, Texas, who acquired the same by virtue of a federal bankruptcy sale.
8. The Kansas Corporation Commission on August 13,1938, entered an order regarding unitization within the Hugoton Field. This Order was affirmed following rehearing on September 17,1938 (Ex. “L”).
9. Republic Natural Gas Company prepared an instrument entitled “Unit Operating Agreement” dated November 28, 1938, (Ex. “F”), which was signed by all of the mineral and fee owners.
[110]*11010. On March 11, 1974, prior to drilling a second well, an Amendment to the Unit Operating Agreement (Ex. “F”) insofar as it related to production from the Panoma-Council Grove formation, was executed by all of the mineral owners and Mobil (Ex. “G”).
11. On April 7, 1974, a well was completed in the NW/4 of Sec. 8, Twp. 33S, R. 39W, Morton County, Kansas as a gas well capable of producing from the Panoma-Council Grove formation. Royalty payments have been made on the gas produced from the Hugoton-Chase pay zone located on the SE/4 of Sec. 6, Twp. 33S, R. 39W, since 1938 or the first part of 1939 in the proportions set out by the Unit Operating Agreement (Ex. “F”) and on the gas produced from the PanomaCouncil Grove well located on the NW/4 of Sec. 8, Twp. 33S, R. 39W, in the proportion set out by the amendment to the Unit Operating Agreement (Ex. “G”), said royalty payments being made since 1974.
12. On June 20,1980, a well known as the Morgan “E” No. 1 was completed in the NW/4 of Sec. 8, Twp. 33S, R. 39W, Morton County, Kansas, as a gas well producing from the Morrow formation. The Morrow formation is located below the base of the Panoma-Council Grove formation. The Morgan “E” unit Morrow formation has not been regulated by the Kansas Corporation Commission, and the only restrictions thereon regarding production is the general Kansas statute which prohibits the taking of more than 25% of a well’s open flow.
13. On February 27, 1981, defendant submitted to plaintiffs a Division Order based upon the provisions contained in the Unit Operating Agreement (Ex. “F”), and a letter of transmittal.
14. On April 27, 1981, the plaintiff, Langdon L. Morgan, by certified mail, mailed a copy of a demand to Mobil. This demand was made in response to a telephone conversation wherein J.M. Glendinning, and later Lowell Case, Mobil employees and agents, stated that the amendment to the Unit Operating Agreement, dated March 11,1973 (Ex. “G”), did not apply to the Anadarko Production Company Morgan “E” unit, since the same was limited to Panoma-Council Grove formation only.
15. On June 15, 1981, defendant submitted to plaintiffs a proposed Amendment of the Unit Operating Agreement. Plaintiffs refused to execute the proposed amendment as submitted because they contended it would amend or attempt to amend, confirm and interpret Mobil’s leasehold status and would attempt to perpetuate the status of Mobil’s claimed interests.
16.

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Bluebook (online)
556 F. Supp. 108, 76 Oil & Gas Rep. 206, 1983 U.S. Dist. LEXIS 19828, Counsel Stack Legal Research, https://law.counselstack.com/opinion/morgan-v-mobil-oil-corp-ksd-1983.